The decision on whether the Arcelor-Mittal deal will proceed will be taken next week. In the event that it is approved, the Democratic Alliance (DA) will request the Financial Services Board to investigate the deal - particularly its impact on individual shareholders whose consumer rights must be protected.

Yesterday, the Public Investment Corporation (PIC), investment manager of the Government Employees Pension Fund (GEPF), joined two other fund managers in their opposition to the "empowerment deal" proposed by Arcelor-Mittal. Their major concern is that the transaction is not broad-based and that a select, politically connected, few will receive substantial financial benefits without incurring a commensurate degree of risk. The DA welcomes and supports this shareholder activism.

The PIC's concern over the deal is significant because it highlights a fundamental flaw in this and many other so-called empowerment deals: poor pension fund members pay to make other, often already rich, people richer. In the case of Arcelor-Mittal, pension fund members own shares in the company via their pension funds' investment in the company. This investment is placed via their asset managers (including the PIC in the case of the GEPF), who have a duty to ensure that their clients' money is optimally invested - given that it must fund their pensions on retirement.

Where a so-called empowerment deal dilutes the value of shares, so that more can be issued to its new empowerment partners, hardworking employees who contribute to pension funds that own the shares on their behalf, are disempowered. This outcome is a perverse, unintended consequence that does the opposite of what broad-based black economic empowerment set out to achieve. In response to the DA's question on the impact of empowerment deals on our economy, government has conceded that other unintended consequences, such as tenderpreneurship and "import fronting" have also arisen.